Merkel to meet France's Hollande on Wednesday

PARIS/BERLIN (Reuters) - German Chancellor Angela Merkel will meet French President Francois Hollande on Wednesday ahead of a key European summit, his office said on Saturday, as the two leaders try to square their differing positions on the euro zone debt crisis.

"They will discuss the upcoming EU summit, the international situation and future Franco-German exchanges," the president's office said in a statement.

A spokesman for the German government told Reuters earlier on Saturday the meeting would take place.

The meeting comes on the eve of a summit that is being seen as a big moment for the embattled 17-nation euro zone which is struggling to formulate a credible response to a debt crisis that has shaken Greece and steeply pushed up borrowing costs for Spain and Italy.

The summit is meant to sketch out a roadmap towards economic union and to send a message to the markets that the continent's leaders are united and determined to do whatever it takes to restore confidence in the battered single currency.

But the pre-summit mood music has not been good.

A meeting in Rome on Friday saw Merkel and Hollande openly sparring over what needed to be done, with the French president and his Italian and Spanish counterparts failing to get Merkel to dilute her opposition to common euro zone bonds.

At the mini-summit, Merkel also resisted pressure to use Europe's rescue funds more flexibly, but did agree to a 130- billion-euro ($156 billion) package to revive growth.

However, Hollande made it clear he was impatient with Berlin's reluctance to go further, saying it should not take 10 years to create jointly underwritten euro bonds.

He wants the June 28-29 summit to agree on more than just a growth package before he is ready to ratify the bloc's fiscal pact, a French diplomatic source said on Friday.

Hollande also wants an EU-wide agreement on progress towards banking sector integration and other financial stability measures, the source said.

With the markets uneasy about the failure of the continent's leaders to put on a united front, Merkel and Hollande are likely to use Wednesday's meeting to try to narrow their differences in order to minimize the risk of another public split.

Nicolas Sarkozy, Hollande's predecessor, had a history of stitching up agendas and agreements with Merkel before such summits, but the socialist president and the German chancellor have so far not been able or willing to do the same.

Hollande is due to meet the head of the European Central Bank Mario Draghi and France's Central Bank Governor Christian Noyer on Monday.